Fiscal federalism and accountability in Nigeria: an ARDL approach

Abstract

PurposeThe purpose of this paper is to examine the relationship between fiscal federalism and accountability in Nigeria. Corruption is a global plague and is endemic in nature. Several policies have been adopted by the Nigerian Government to institutionalize accountability and combat the scourge of corruption that have hindered socio-economic progress but to no avail.Design/methodology/approachThus, this study examined fiscal federalism and accountability issues in Nigeria using secondary data and used the auto-regressive distributed lag econometric technique to analyse the data.FindingsThe results from this study reveal that fiscal federalism fails to mitigate corruption in the long run in Nigeria because of poor bureaucratic quality (BQ) and ineffective law and order (LOR).Social implicationsFiscal decentralization must be accompanied by legislations that will strengthen BQ of fiscal institutions at subnational levels and promote effective LOR.Originality/valueThis study recommends that for fiscal federalism to mitigate corruption in the long run, government must adopt appropriate policies to improve BQ and further strengthen LOR in Nigeria. The finding also suggests that to promote public sector accountability in Nigeria, government should ensure the simultaneous decentralization of expenditure and revenue to lower tiers of government. This study provides detailed empirical evidence that fiscal decentralization without accountability will accentuate public sector corruption, and in the long run, weaken local economic development initiative to boost growth and development.